Expert determination is a type of alternate dispute resolution. Expert determination is a more flexible alternative to litigation which involves an independent third party, the expert, who hears and makes a decision about the dispute. The expert is required to conduct the determination following rules that the parties must agree to beforehand. Like all forms of dispute resolution, there are both advantages and disadvantages to this dispute resolution process as set out in this article.
Advantages of Expert Determination
In most cases, expert determination can offer a binding resolution to a dispute. However, an expert’s determination can only be binding by agreement between the parties. The rules agreed to by the parties, must include a clause stating that the parties intend to be bound by the determination.
Where the parties agree to be bound, an expert’s determination will be final. This finality is advantageous in the sense that the parties involved in the dispute can receive their determination and then move on with their business and life. There are however some disadvantages of this element of finality which are set out below.
The process of expert determination is much more informal compared to court proceedings. The informality allows for the complexities and delays of litigation to be avoided. Avoiding litigation allows for the parties to minimise their expense.
Expert determination is not an adversarial process, and it is not judicial in nature. It can assist the parties in maintaining their business relationships. It is particularly beneficial in circumstances where long term contracts are in place.
As expert determination is not judicial in nature, the dispute resolution process is not made public like court proceedings. This private aspect is particularly relevant to parties that wish to maintain confidentiality over sensitive information. The confidential nature of expert determination can also assist parties in protecting their reputation and good name.
Expert determination is particularly effective in circumstances where a dispute is technical in nature. Court proceedings that are technical in nature will require expert evidence to be given to the court. Court proceedings of this type can be very costly and are avoidable where the parties choose to have their dispute determined by an expert.
Disadvantages of Expert Determination
The scope of the dispute which is to be determined by the expert must be contained in the rules agreed to by the parties. Once the determination process has commenced, a party will be prevented from raising an issue which was not included in the agreed rules. If the rules are not wide enough to capture all possible issues in dispute, further proceedings may be required to settle the entirety of the dispute.
As discussed above, an expert’s determination is final. This finality dissolves the parties’ right to appeal. The right of appeal becomes particularly important should the expert make an error in coming to their decision.
The fact that the expert determination process is not judicial in nature and its lack of formality can also pose some disadvantages. There is no cross-examination during the expert determination process which means there is no ability to test the evidence of an opposing party.
An expert is also not bound to make their determination based solely on the facts presented by the parties. Where appropriate, an expert can use their personal observations and experiences to reach a determination.
While there are many advantages to expert determination, there can be just as many disadvantages. When considering whether expert determination is right for you, it is recommended that you seek expert legal advice.
LegalVision’s expert dispute resolution team are more than happy to provide you with that advice. If you need assistance drafting an expert determination clause into your contract or have any further questions, contact LegalVision today on 1300 544 755.